Partition Actions: Determining Proper Reimbursement of Advanced Funds

Partition Actions: Determining Proper Reimbursement of Advanced Funds

Updated on September 17, 2018

In California, when our partition attorneys deal with accountings that accompany partition claims, it is very important to keep in mind how to distribute funds upon the sale of the partitioned property. Generally, a party who pays a disproportionate share of the property’s expenses is entitled to reimbursement for the amount the party paid in excess of its ownership interest.  Doing the math to determine how the reimbursement shall occur is important because depending on how the parties or the court does the math may vary the amount each party receives.  The California Court of Appeals dealt with this exact issue in Southern Adjustment Bureau v. Nelson (1964) 230 Cal.App.2d 539.

In Southern Adjustment Bureau  the Court of Appeals walked us through the relevant analysis as follows:

To illustrate: A and B each own an undivided one-half interest in Blackacre as tenants-in-common. A advances $2,000 for which he is entitled to contribution from B of $1,000. In an action for partition, the court orders Blackacre sold.

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How should the proceeds be divided?

Possibility One:

Blackacre is sold for $10,000. A receives $2,000 (the total advancement). The residue of $8,000 is divided equally.

A receives $6,000.

B receives $4,000.

Possibility Two:

Blackacre is sold for $10,000. A receives $1,000 (B’s contribution to the advancement). The residue of $9,000 is divided equally.

A receives $5,500.

B receives $4,500.

Possibility Three:

Blackacre is sold for $10,000. The $10,000 is divided equally. A is given a lien of $1,000 on B’s share of $5,000.

A receives $6,000.

B receives $4,000.

These illustrations point out that the reimbursing cotenant receives a $500 advantage when the measure of contribution is determined by applying the formula suggested in possibility two, the method followed by the trial court. (1) When a cotenant makes advances from his own pocket to preserve the common estate, his investment in the property increases by the entire amount advanced. Upon sale of the estate he is entitled to be reimbursed his entire advancement before the balance is equally divided.   Id. at 541.

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Obviously, litigating and resolving partition actions requires knowledge of the intricacies of the relevant area of law to maximize the amount an owner can expect to receive by way of the sale of the property and the partition judgment.  Our Los Angeles based partition attorneys of experience litigating partition actions and resolving partition claims throughout Southern California. To see if you qualify for a free 30 minute consultation, contact us by filling out the contact box or at (310) 954-1877, or [email protected].

See related: Procedure For Selling Property After a Partition by Sale Judgment